Ipsen delivers strong 2017 results with 21.1% sales growth and Core operating margin increase of 3.4 points and expects significant further growth in sales and margin in 2018

Ipsen delivers strong 2017 results with 21.1% sales growth and Core operating margin increase of 3.4 points and expects significant further growth in sales and margin in 2018

Ipsen delivers strong 2017 results with 21.1% sales growth and Core operating margin increase of 3.4 points and expects significant further growth in sales and margin in 2018

Paris (France), 15 February 2018 – Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical group, today announced financial results for the full year 2017.

Financial highlights

  • Full Year 2017 Group sales growth of 21.1%1 driven by Specialty Care sales growth of 25.9%1 reflecting continued Somatuline® momentum and increasing contribution from the Cabometyx® and Onivyde® launches, and Consumer Healthcare back to growth at 1.4%1.
  • Full Year 2017 Core Operating margin at 26.4%, up 3.4 points after investments for the Cabometyx® and Onivyde®
  • Financial guidance for 2018 of Group sales growth greater than 16.0%1 and Core operating margin greater than 28.0% of net sales.

David Meek, Chief Executive Officer of Ipsen, stated: “Our outstanding performance in 2017 exceeded expectations with record highs for sales growth and core operating margin. Sales grew by an impressive 21.1%1 and core operating margin improved by 3.4 points year-on-year, driven by the excellent Specialty Care performance.
In 2018, we will maintain the positive momentum of the current business to deliver continued strong growth and further margin improvement, well on track to meet our 2020 financial objectives. Business development and the accelerated transformation of the R&D organization also remain top priorities to expand our innovative pipeline and sustain long-term growth.”

Review of full year 2017 results
Note: Unless stated otherwise, all variations in sales are calculated excluding foreign exchange impacts. Currency effects are established by recalculating net sales for the relevant period at the exchange rates used for the previous period.
Group sales reached €1,908.7 million, up 21.1% year-on-year.
Specialty Care sales reached €1,591.9 million, up 25.9%, driven by the strong growth of Somatuline® and the €108.6 million contribution from key new products Cabometyx® (mainly sales from Germany and France) and Onivyde® (consolidated since April 2017 following the acquisition from Merrimack Pharmaceuticals). Somatuline® growth of 31.9% was driven by continued positive momentum in North America (62.1% growth in the U.S.) and solid performance throughout Europe. Dysport® growth was fueled by the good performance of Galderma as well as a strong growth in the Middle East and some Eastern European countries. Decapeptyl® sales reflect good volume growth across Europe and a positive trend in China despite some continued pricing pressure.
Consumer Healthcare sales reached €316.8 million, up 1.4% (up 3.2% adjusted for the impact of the Etiasa® contractual set-up in China), driven by the good performance of Smecta® and Fortrans/Eziclen® as well as the contribution of the newly acquired products (including Prontalgine® and Buscopan®).
Core Operating Income totaled €503.6 million, up 38.4%, driven by the sales growth and after increased commercial investments for the new products Cabometyx® and Onivyde® and R&D investments to support the development of the growing pipeline.
Core operating margin reached 26.4% of net sales, up 3.4 points compared to 2016.
Core consolidated net profit was €362.7 million, compared to €263.6 million in 2016, up 37.6% and impacted by higher financial and income tax expenses.
Fully diluted core earnings per share grew by 37.0% to reach €4.36, compared to €3.18 in 2016.

IFRS Operating income was €397.2 million, up 30.4% after higher amortization of intangible assets (excl. software), restructuring and integration costs, slightly offset by lower impairment charges. Operating income margin at 20.8% is up 1.6 points compared to 2016.
IFRS Consolidated net profit was €272.9 million versus €226.6 million in 2016, up 20.5%, after higher financial and income tax expenses, mainly from the recent U.S. tax reform.
IFRS Fully diluted EPS (Earning per share) was €3.28 versus €2.73 in 2016.

Free cash flow reached €309.0 million, up by €80.2 million or 35.1%, driven by the improvement in Operating Cash Flow, partially compensated by higher restructuring and financial costs.
Closing net debt reached €463.3 million at the end of 2017, versus a net cash position of €68.6 million at the end of 2016, reflecting the acquisitions completed during the first half of 2017 for Onivyde®, the Consumer Healthcare OTC product portfolio and the equity stake in Akkadeas Pharma, as well as the additional milestones paid for Cabometyx® and Xermelo®.

Impact of U.S. tax reform
The Group booked an expense of €46.0 million related to the negative impact of the newly signed U.S. tax reform on the value of its U.S. tax losses carried forward. This expense was partly offset by the recognition of previously unrecognized deferred tax assets in the U.S. for €19.7 million.
Subject to further analysis and interpretation of the U.S. tax reform, the combined effect of our growth in the U.S. and the reduction of the Federal tax rate will lead to a reduction of the Group effective tax rate by 2 to 3 points in 2018.

Comparison of 2017 performance with financial objectives
The Group exceeded the limit of its updated guidance provided on 27 July 2017 for Specialty Care and Consumer Healthcare sales growth and for Core operating margin.
The table below shows the comparison between the financial objectives provided on 27 July 2017 and 2017 actuals.

Dividend for the 2017 financial year proposed for the approval of Ipsen’s shareholders
The Ipsen S.A. Board of Directors, which met on 14 February 2018, has decided to propose at the annual shareholders’ meeting on 30 May 2018 the payment of a dividend of €1.00 per share, up from €0.85 for the 2016 financial year.

2018 Financial guidance
Consistent with its 2020 ambition, the Group has set the following financial targets for 2018:

  • Group sales growth year-on-year at constant currency greater than +16.0%, fueled by strong double-digit growth of Specialty Care and low single-digit growth of Consumer Healthcare. Based on the current level of exchange rates, sales growth at current exchange rates should be negatively impacted by approximately 4%;
  • Core operating margin greater than 28.0% of net sales.

Meeting, webcast and conference call for the press
Ipsen will host a press conference on Thursday 15 February 2018 at 9:30 a.m. (Paris time, GMT +1) at Salons de l’hôtel des Arts et Métiers – 9 bis avenue d’Iéna – 75116 Paris (France). A conference call will take place and a web conference (audio and video webcast) will be available at old.ipsen.com. Participants should enter the call approximately 5 to 10 minutes prior to its start. No reservation is required to participate in the conference call.
Standard international: +44 (0) 1452 555 566
France: +33 (0)1 76 74 24 28
UK: +44 (0)8 44 4933 800
United States: +1 646 851 2094
Conference ID: 7198548
A recording will be available for 7 days on Ipsen’s website and at the following number: +44 (0) 1452 550 000 – conference ID: 7198548

Meeting, webcast and conference call for the financial community
Ipsen will host an analyst meeting on Thursday 15 February 2018 at 2:30 p.m. (Paris time, GMT+1) at its headquarters in Boulogne-Billancourt (France). A conference call will take place and a web conference (audio and video webcast) will be available at old.ipsen.com. Participants should dial in to the call approximately 5 to 10 minutes prior to its start. No reservation is required to participate in the conference call.
France and continental Europe: +33 (0)1 76 74 24 28
UK: +44 (0)14 5255 5566
United States: + 1 631 510 7498
Conference ID: 2665077
A recording will be available for 7 days on Ipsen’s website and at the above numbers.

[1] 2017 revised financial objectives communicated on 27 July 2017
[2] Year-on-year growth excluding foreign exchange impacts. Currency effects are established by recalculating net sales for the relevant period at the exchange rates used for the previous period
[3] 2017 revised financial objectives communicated on 27 July 2017
[4] Year-on-year growth excluding foreign exchange impacts. Currency effects are established by recalculating net sales for the relevant period at the exchange rates used for the previous period

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